CPA - FAR EXAM QUESTIONS AND 100% CORRECT ANSWERS
The following are included in the interim financial statements of an entity filed with the
SEC under Regulation S-X, EXCEPT:
A. An income statement for the cumulative period of 12 months ending during the most
recent fiscal quarter.
B. An income statement for the period from the close of the preceding fiscal year to the
close of the most recent fiscal quarter.
C. A statement of cash flows for the most recent fiscal quarter.
D. A balance sheet as of the end of the preceding fiscal year. - ANSWER Choice C is
correct. The interim financial statements filed with the SEC would not include a
statement of cash flows for the most recent fiscal quarter, but should include
statements of cash flows for the period between the end of the preceding fiscal year and
the end of the most recent fiscal quarter, and for the corresponding period for the
preceding fiscal year.
Topper Company began operations during the current year and experienced the
following:
I. Unrealized holding gains from trading debt securities of $12,000.
II. Realized gains from selling available-for-sale debt securities of $15,000.
III. Unrealized holding gains from available-for-sale debt securities of $20,000.
Topper's tax rate is 30%.
In Toppers December 31 balance sheet, Accumulated Other Comprehensive Income
would be:
A.$47,000
B.$20,000
, C.$14,000**
D.$32,900 - ANSWER Unrealized gain on available-for-sale debt $20K less tax rate (20K
* .3) 6K = 14K. Correct answer is C.
Comprehensive income is PUFI
Are gains and losses on the disposal of assets reported on a "gross basis" (the sale
proceeds and the net book value of the disposed asset are reported) or on a "net basis"
(only the difference between the sale price and the net book value of the disposed asset
is reported)? - ANSWER Gains and losses are reported at their net amount (proceeds
less net book value).
How does a "multi-step" income statement differ from a "single step" income
statement? - ANSWER - A multiple-step income statement segregates operating
revenues and expenses from nonoperating revenues and expenses and other gains and
losses.
- A single-step income statement simply presents net income from continuing operations
without the segregation of operating and nonoperating revenues and expenses by
deducting total expenses from total revenues.
The gain (loss) from discontinued operations may include the following- ANSWER An
impairment loss, a gain (loss) from actual operations, and gain (loss) on disposal
How do we account for subsequent increases in the fair value of a discontinued
component? - ANSWER A gain is recognized for the subsequent increase in fair value
minus costs to sell (but not in excess of previously recognized cumulative loss). The gain
is reported in the period of increase.
What are the criteria required to report a disposal in discontinued operations? -
ACCOUNTING PRINCIPLES A disposal of a component, a group of components, an
operating activity, or a nonprofit activity is reported in discontinued operations if the
disposal represents a strategic shift that will have or has a significant impact on an
entity's operations and financial results.
The following are included in the interim financial statements of an entity filed with the
SEC under Regulation S-X, EXCEPT:
A. An income statement for the cumulative period of 12 months ending during the most
recent fiscal quarter.
B. An income statement for the period from the close of the preceding fiscal year to the
close of the most recent fiscal quarter.
C. A statement of cash flows for the most recent fiscal quarter.
D. A balance sheet as of the end of the preceding fiscal year. - ANSWER Choice C is
correct. The interim financial statements filed with the SEC would not include a
statement of cash flows for the most recent fiscal quarter, but should include
statements of cash flows for the period between the end of the preceding fiscal year and
the end of the most recent fiscal quarter, and for the corresponding period for the
preceding fiscal year.
Topper Company began operations during the current year and experienced the
following:
I. Unrealized holding gains from trading debt securities of $12,000.
II. Realized gains from selling available-for-sale debt securities of $15,000.
III. Unrealized holding gains from available-for-sale debt securities of $20,000.
Topper's tax rate is 30%.
In Toppers December 31 balance sheet, Accumulated Other Comprehensive Income
would be:
A.$47,000
B.$20,000
, C.$14,000**
D.$32,900 - ANSWER Unrealized gain on available-for-sale debt $20K less tax rate (20K
* .3) 6K = 14K. Correct answer is C.
Comprehensive income is PUFI
Are gains and losses on the disposal of assets reported on a "gross basis" (the sale
proceeds and the net book value of the disposed asset are reported) or on a "net basis"
(only the difference between the sale price and the net book value of the disposed asset
is reported)? - ANSWER Gains and losses are reported at their net amount (proceeds
less net book value).
How does a "multi-step" income statement differ from a "single step" income
statement? - ANSWER - A multiple-step income statement segregates operating
revenues and expenses from nonoperating revenues and expenses and other gains and
losses.
- A single-step income statement simply presents net income from continuing operations
without the segregation of operating and nonoperating revenues and expenses by
deducting total expenses from total revenues.
The gain (loss) from discontinued operations may include the following- ANSWER An
impairment loss, a gain (loss) from actual operations, and gain (loss) on disposal
How do we account for subsequent increases in the fair value of a discontinued
component? - ANSWER A gain is recognized for the subsequent increase in fair value
minus costs to sell (but not in excess of previously recognized cumulative loss). The gain
is reported in the period of increase.
What are the criteria required to report a disposal in discontinued operations? -
ACCOUNTING PRINCIPLES A disposal of a component, a group of components, an
operating activity, or a nonprofit activity is reported in discontinued operations if the
disposal represents a strategic shift that will have or has a significant impact on an
entity's operations and financial results.
